Thursday, February 28 2019 14:00

ArmInfo. A group of entrepreneurs from Armenia has worked out and proposed to the international financial market a unique and actionable marketplace, that enables the commercial banks from developing countries expand their financial capabilities. Whereby the Haylend platform banks located in the emerging markets will be able to get better of the comparable advantage of higher cost of money. About the Haylend platform, that will launch soon, the financial reviewer and CEO of ArmInfo Emmanuil Mkrtchyan had an interview with the CEO and co-founder of Haylend Hayk Manukyan.

 

Hayk, the platform you offer is at some point a revolutionary financial instrument. It has the potential to transform the resource structure of many financial institutions, and primarily banks. For you are creating an international deposit marketplace that enables any foreigner to open a deposit account online. It means that in case of approbation hundred of million dollars will flow where the cost of money is high. How complicated process is it for the clients, as well as the banks?

 

You know, in the condition of technological advancement, especially financial technologies, each and any new product has to differ with the high level of convenience and easiness of use. Generally, I would say we offer to the market and people very quick and convenient instrument which reasonably differs from the conservative banks that in fact don't enhance their complicated processes for hundreds of years. With us they avoid hassles, requirement of physical presence and approval of the residency. If one lives in USA, UK or France, and they are not satisfied with the offered interest rates that of course express the low level of local risk, our platform gives the opportunity to open a deposit account online in those countries, where the deposit interest rates and the cost of money are high to get incomparably higher yields. On our platform the clients register and pass verification in a few minutes, after which they can pick the bank offers of our partners, open an account and transfer the money. Likewise, for the banks there is no need for costly and time-consuming integration for using the platform.

 

Anyway, considering that banks will serve non-residents, moreover, through the online platform, how the bank will perform the customer identification.

 

The identification will be carried out with the support of a third party. The latter is a British company that has been providing dozens of financial and non-financial companies with identity, AML/CFT/PEPs and other risk-mitigating services for over eight years whereby databases of over two hundred countries around the world.

 

Coming back to the question of the investment risk and return ratio, it is common that the higher the cost of money the higher the risks, and vice versa. Let's be honest, not every New York citizen, not even the bravest ones, will decide on diversifying part of their money to the Armenian or Tajikistan bank deposit, even if the investment yield is triple the local one. What's your answer to that? Do you recall the country international rating of Armenia or Tajikistan? In the professional slang those are called "recycle". How are you going to relief and convince your clients?

 

The level of risk and stability of the banking system are not necessarily linked directly to the country's international rating. Let's just bring the example of Armenia. Our country has a B + rating, but with the stability of the financial system is among the top ten countries in the world. In addition, banks offer high interest rates, as domestic market is weak, demand for loans exceeds that of deposits, and banks are constantly taking additional measures to ensure liquidity.

 

Let’s assume there is a discrepancy between the banks and clients in the result of a transaction. In such cases, how will judicial issues be solved?

 

Haylend is registered in the Republic of Estonia, and disagreements with our customers will be resolved in the European Court. And the banks will continue to move each one under its own legislation.

 

Have you conducted market analysis and what are the results? How is your offer interesting for the high-income country citizens?

 

Sure. We have been traveling for several months, interviewed many potential customers, and only after the idea validation we built the business model. The problem itself is not new. For a long time different online platforms and investment tools exist, but they are either too risky, not affordable to non-financiers, or offer low returns. Haylend offers a low-risk solution that is several times more profitable than the standard yield offered by their banks.

 

Together we mentioned the importance of country risks- inflation rate, political and economical stability, etc. How are you choosing the partner banks? What are the criterias? As even in the financially stable countries there are toxic institutions and default cases. Also, are those deposits under the guarantee of the guarantee scheme?

 

In the case of banks, we also highlight various circumstances from the bank's financial stability to reputation. In particular, openness and flexibility for innovative solutions in the bank, high level of customer service, management staff and shareholders' activities, etc. Taking into account the fact that the attracted funds will be mainly allocated to lending, we also highlight the composition and degree of risk of the loan portfolio, the financing and business involvement of the bank in the real sector of the economy. Given these and other similar requirements, we plan to cooperate with four to five banks in Armenia, with which we are already in the negotiation phase.

 

Do you have competitors in the market or are there similar platforms? What are the competitive advantages of Haylend?

 

In general, any investment instrument can be considered as a competitor to us. But we do not have direct competitor and we are the first to offer a worldwide deposit marketplace. The benefits are tangible in terms of profitability, convenience and risk management.